Another blow to Microsoft-Activision deal, UK regulator places further restrictions

The Competition and Markets Authority issued an order restricting both tech giants from acquiring an interest in each other's subsidiaries.
Sejal Sharma
Microsoft - Activision Blizzard
Microsoft - Activision Blizzard

Anadolu Agency/Getty 

Weeks after the Competition and Markets Authority (CMA) blocked Microsoft's $69 billion acquisition of Activision Blizzard, the U.K. regulator dealt another blow to the biggest-ever gaming deal.

The regulator has issued an interim order, published yesterday, restricting both tech firms from acquiring an interest in each other without its consent.

The order states that both Microsoft and Activision will need prior written consent from the CMA before any of the firms:

  • acquire an interest in their respective subsidiaries,

  • acquire an interest in an enterprise holding an interest in either firm or carrying on the business of either firm from time to time,

  • or hold an option to acquire an interest referred to in the above two bullet points

Interesting Engineering had earlier reported that CMA had expressed concerns about how the deal could result in tech giant Microsoft’s dominance in the gaming space and affect Sony PlayStation’s ability to compete. 

Microsoft owns Xbox, which directly competes with Sony’s Playstation. Microsoft’s acquisition of Activision, the makers of popular games such as Call of Duty, Warcraft, and Candy Crush, would mean that Sony may lose many users if Call of Duty (COD) becomes an Xbox-only game.

Microsoft has tried hard to convince Sony that it would keep COD on PlayStation if the merger goes through and had promised to offer Sony a ten-year agreement, similar to the one given to Nintendo to bring COD to its video game consoles.

While Japan’s antitrust regulator has already approved the deal, the U.S. Federal Trade Commission filed a lawsuit in December last year to block the deal, reported Reuters.

BBC reported that both firms had criticized the decision and said they would appeal. An Activision official said that it showed the U.K. was "clearly closed for business" when the regulator stopped the merger weeks ago.

For the deal to go through, it must be approved by U.K., E.U., and U.S. regulators. The E.U. is expected to decide in May.

The CMA had earlier said that it would take action to remedy, prevent, or mitigate any substantial lessening of competition (SLC) that may result from the deal. The CMA has also asked that Microsoft and Activision ensure that each of their subsidiaries comply with the order. “If Microsoft or Activision has any reason to suspect that this Order might have been breached, it shall immediately notify the CMA,” the U.K. regulator’s order further said.

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